Reforms to Local Housing Authorities

In the FY 2013 budget, the Patrick-Murray Administration
proposes a series of reforms to address the governance structure, financial
transparency and management of the state’s public housing portfolio.

There are roughly 80,000 public housing units in
Massachusetts, of which 50,000 are state funded. This public housing is the
largest source of affordable housing for extremely low-income residents across
the state. Many of the units are more than 60 years old. The combination of
age and a lack of investment by prior Administrations has left much of the
portfolio at risk of being uninhabitable.

Since 2007, the Patrick-Murray Administration has invested
nearly $400 M in capital improvements to the public housing portfolio in an
effort to preserve public housing for those who need it most. The Administration
has also increased operating subsidies to help maintain housing and will
propose another modest increase in this budget.

As the Administration increases funding for public housing,
it is also proposing a number of reforms to improve the management and increase
efficiency and transparency of local housing authorities to ensure that we are
meeting the goal of housing for low-income families.

Financial and Reporting Reforms

There are 242 Local Housing Authorities (LHAs) in
Massachusetts. Each LHA is an independent authority, overseen by a Board of
Directors. The Board is responsible for oversight of the finances and
operations of the LHA. Most LHAs are funded by a combination of state, federal
and local funding.

The proposed reforms recognize that while the state provides
funding to LHAs, it does not directly manage or oversee the authorities’
finances. These reforms focus on increasing transparency, setting standards in
line with those of other independent authorities and reviewing the rules and
penalties for non-compliance.

Enhanced Reporting and Financial Reforms

Governor Patrick will file legislation to eliminate compensation,
where it exists, for LHA board members.

Effective immediately via administrative action, the
Department of Housing and Community Development (DHCD) will:

Require LHAs with state public housing to provide DHCD
with the top five salaries of the highest-paid management staff;

Set a maximum salary for LHA Executive Directors;

Require LHA board members to certify Executive Director
salaries and detailed benefits every year when budgets are submitted. Boards
also would be required to match payroll documents to actual expenditures;

Prohibit state subsidies from being utilized for Executive
Directors’ buyouts that are above and beyond what a state employee would
be eligible for;

Require reports to confirm monthly meetings occur and to
confirm the attendance of board members;

Make ethics and other training in best practices from the
National Association of Housing and Redevelopment Officials (NAHRO), in
collaboration with DHCD, mandatory for public housing employees and board
members and required to receive state funding;

Require more detailed auditing procedures including
verifying director compensation and salary schedule, and work with the
State Auditor to review and potentially revise their auditing process;

Require year-end Financial Certification that would
require Executive Directors to present year-end financials to their
respective Boards. Boards and Executive Directors would then jointly
certify and submit statements to DHCD. Currently LHA Executive Directors
and Fee Accountants complete and submit a form to DHCD certifying year-end
financials;

Re-examine delegated Authority for Procurement to allow
authority for purchases, where they already exist, to continue to be
delegated from the Board to the Executive Director, but that purchases
above certain thresholds be required to be approved by the Board; and

Deem any LHA which does not comply with all of DHCD’s
existing and enhanced reporting requirements a LHA “Not in Good Standing”
with the Department. Make any LHA “Not in Good Standing” ineligible to
receive state funding until current on all reporting.

Review the Rules

A comprehensive review of existing regulations, contracts
and agreements that help DHCD manage the LHAs should be the final phase and
should reflect all decisions and changes made regarding the actions presented
above.

Changes in Governance and Management

Governor Patrick recognizes the importance of public housing
in Massachusetts and has increased funding for public housing throughout his term.
However, in light of recent events, he believes that reforms should be
considered that will improve the accountability of housing authorities to the
local, state and federal funders as well as to the residents, including whether
to regionalize or otherwise consolidate oversight into fewer separate
authorities. To this end, Governor Patrick will sign an Executive Order
establishing a Commission on Housing Authority Governance Reform. The
Commission will confer with public housing stakeholders in Massachusetts and in
other states, and develop, within 60 days, recommendations to the Governor for
ways to strengthen housing authority oversight.